Commentaries on current events, political economy, and the Communist movement from a Marxist-Leninist perspective.
Zigedy highly recommends the Marxist-Leninist website, MLToday.com, where many of his longer articles appear.

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Saturday, December 25, 2010

In the fall of 2008, I wrote the following (2008: A Reprise of 1976?). It seems timely to reproduce it today:

Upon taking office, the Carter administration began a steady drift to the right. Following the lead of Democratic Party strategist, Patrick Caddell, Carter chose a business-friendly approach that placed the battle against inflation at the center of domestic policy. His personal opposition to the Humphrey-Hawkins bill led to the passage of a bill unsatisfactory to organized labor. National health care was shelved and tax reform was never achieved. Carter vetoed public works legislation as inflationary. The neo-liberal deregulation agenda generally attributed to the ultra-right actually began with Carter’s deregulation of the airline industry in 1978. He also started the process of deregulation of other industries, such as communications, oil and finance.

Little was advanced to improve either the status of African Americans or race relations, though Carter appointed more minorities to posts in his administration than any previous President.

Despite his platform promise to reduce military spending, Carter expanded the military budget, reversing the trend of the prior ten years. With Carter’s assent, the US began to send military equipment to the Afghan mujahadeen even before the Soviet occupation. Support for these feudal warlords harnessed to US Cold War aims soon reached $600 million per year. Ironically, they are the cadres now fighting the US occupation of Afghanistan. Carter instituted the so-called Carter Doctrine pledged to oppose any but US influences in the Persian Gulf area. This oil-driven version of the previous Monroe and Truman Doctrines has remained US policy to this day and justifies the use of military force in the region when US “interests” are claimed.

To his credit, Carter negotiated nuclear weapons reductions (SALT II) and a Panama Canal treaty, and also secured a minor reduction of US occupation troops in the Republic of Korea.

Carter’s retreat from the Democratic platform produced a number of oppositional blocs, including the labor/liberal-supported Democratic Agenda in late 1977 and the Progressive Alliance in 1978. The Democratic Party base of labor, African Americans and liberals was stung by the growing conservatism of the Carter Administration, a rebuff that led to Ted Kennedy’s campaign against the incumbent in the 1980 primary elections.

With Carter’s failure to steer a new, progressive course, the electorate, with the limited choice offered by the two-party system, opted for a different direction in 1980.

The promise of 1976 was squandered by the Carter Administration. Will the opportunities for change afforded by Republican failure be wasted again in 2008?

After much hesitancy, a growing segment of the broadly conceived left – Communists, Socialists, radical democrats, and New Deal Democrats – has come to recognize that the Obama Administration operates much like the previous Democratic administrations over the last thirty-five years. Carter shared self-righteousness and cultivated civility with the current President, along with a ready willingness to sell out campaign promises and platform statements. Clinton exhibited a cunning slipperiness and lack of even superficial principle that is often revealed in Obama’s public statements.

But these are merely features of their political personality, features that occupy the pundits at The Nation and other liberal publications. The common thread that binds Democratic administrations, top national Democratic elected officials, and their attendants is that they are members of an elite club and bound to place the interests of the club first- they are part of and employed by the rich and powerful. While this is readily apparent to many of us, there are still many waiting for a public confession.

Some temper their disappointment by arguing that the Obama Administration stands between us and a far worse fate at the hands of the extreme-right. Therefore, we must support it or permit the pain of a more onerous administration. This is, of course, an iteration of the old “lesser-of-two-evils” position. But that position was meant only to be a tactical retreat - a temporary, uncomfortable affair followed by an embarrassed exit – and not a life-long marriage. Instead, it is the constant refrain, election after election, of many prominent leftists and “progressive” Democratic Party apologists.

While there may be nothing wrong with this stance for those solidly – and happily – wedded to the Democratic Party and its self-limiting goals, the “lesser-of-two-evils” concession is poison to anyone with greater aspirations for the country and partisanship for its majority of people who work for a living. For the left, it is simply disastrous.

The “lesser-of-two-evils” left suffers two pathologies: the first, a delusion of grandeur, and the second, an allergy to the principles of oppositional politics.

It is illusory to think that the US left yet matters in national or even state-wide bourgeois politics, especially within the most advanced form of bourgeois politics: the two-party system. When pundits and the media refer to the Democratic Party base, some take that to be the “left.” It is not. It is actually the bureaucracy-led labor movement, urban liberals, and African American and Latino voters. They matter in supporting the Democrats, but less and less in the policies pursued by elected officials. They are not, as a whole, the left, but constitute the natural constituency for left-led movements. They are potentially a left base, should the left organize and agitate among these groups.

But to believe that the left matters within the two-party system is delusional. Come election time in the national or statewide arena, the efforts or absence of the left on behalf of the Democrats is never decisive and is usually not even marginally influential. Nor does the left’s cheerleading make a difference. Some leaders and pundits rally the ranks at election time as though a squad of infantry would decide the clash of armies.

Of course there is always the Nader example that liberals dredge up whenever pressed on the folly of supporting weak, ineffectual candidates. Left votes for Nader, they assert, cost Al Gore the 2000 election. They conveniently ignore the dozens of reasons - most importantly, Gore’s lack luster campaign – for the defeat. And they arrogantly presume that Nader votes really belong to the Democratic Party. Such a presumption underlines the contempt that Democrats show to their base. Their votes, too, are owned by the Democrats, a condition of electoral slavery.

Secondly, the “lesser-of-two-evils” strategy constitutes a complete and catastrophic misreading of oppositional politics. A left political organization – too small to actually contest elections – serves nonetheless as a material force for influencing elections by projecting advanced demands. Those demands may, in turn, shift electoral discourse away from the usually overwhelming pressure of wealth, media access and power. Of course, it may not, but it will draw adherents to the side of truth and justice. And in the longer view, it will strengthen and build the left. Thus, the left grows in times of strong independent movements for social change. And contra the “lesser-of-two-evils” philosophy, it provides the spine for those rare occasions when the Democratic Party actually advances the peoples’ interests such as with the New Deal or racial desegregation.

Therefore, the role of the left is a critical role - a role to challenge and provoke social institutions to move away from their tendency to accept and expand the privileges of the few.

Since the diffusion and loss of focus of the anti-capitalist left, this critical role has been lost in US politics. Reinforced by the handful of left publications that obsess over the maneuvers and deals of bourgeois politicians, the broad left has accepted electoral politics as its touchstone, waiting patiently for an establishment candidate who can revisit the myths attached to the great liberal icons: Roosevelt and Kennedy. This is a tragic misreading of history and a shameless neglect of the historic mission of left movements.

But even more shameless is the posture of elements of the anti-capitalist left who speak and write of a grand coalition against the ultra- or extreme right. They posture as though there is a supra-organization joined around the sole goal of burying the foul creatures inhabiting a corner of US politics since the country’s founding. There is no such coalition. Instead, there are many groups with varied interests that latch onto the Democratic Party because they see nowhere else to turn. Historically, it has been the goal of the left to nurture a broader vision that could tie these interests together into a real coalition, not to merely halt the influence of the most backward political forces, but to improve the lot of the majority.

Miguel Figueroa, leader of the Communist Party of Canada, spoke well when he addressed a recent gathering of Communist Parties in South Africa:

It is equally if not more impermissible however for the Communists to enter into alliances in a self-effacing way, making unprincipled political and ideological concessions for the sake of maintaining unity, and jettisoning the independent role of the Communist Party in the process.

But in the case of the US, there is only an imaginary alliance that makes one concessionary demand upon its members: vote and support Democratic Party candidates. When all the rhetoric is cast off, the “alliance” is merely a fig leaf for unconditional loyalty to the Democratic Party and its agenda. And “unity” is never in jeopardy when there is only a one-way conversation between the Democratic Party leadership and those who dutifully follow.

The “Marxists” who contrive this fictional alliance, in moments of ideological nostalgia, appeal to the United Front tactics offered by the Communist movement in the struggle against fascism. But even a casual read of the documents endorsed by the Communist International demonstrate that these “Marxists” neither understand the tactic nor know when and how to apply it.

But suppose Obama had delivered on many of his campaign promises. Would that have earned our uncritical support? Respect, sure. Critical support, perhaps. But not the fawning idolatry that much of the left demonstrated after the election. Nor should it have brought a virtual collapse of the peace and justice movement. For the left, the task of constantly prodding and pushing the political goal forward should not be compromised in victory or defeat.

And now it’s time to get beyond wringing our hands over what Obama promised, what he did, and what he will or will not do, and focus on what we will do – a stance that promises to bring life back to the left.

Thursday, December 16, 2010

Debt hysteria is undoubtedly the most disgusting, lie-infested scam since George W. Bush launched his propaganda blitz leading up to the unprovoked invasion of Iraq. Like the Bush offensive, the debt scam has drawn public attention away from the critical issues facing the world - especially working people - at this critical moment. Unlike the Bush-era deceptions, debt hysteria has thoroughly infected policy throughout the world.

It is a supreme irony that the debt fears now provoked by government deficits are construed as excessive, while the decades of growth of personal debt and speculative debt in the private sector were seen as benign. Where all government debt grew roughly 8.5 times from 1978 to 2008, US mortgage debt grew 11.5 times, non-financial business debt grew by over 10 times, and debt in the financial sector by nearly 50 times! (Estimates from Epic Recession: Prelude to Global Depression, Jack Rasmus, p. 33) Yet few alarms were triggered as these vast sums of debt served to sustain and grow the profit margins of monopoly corporations. As long as the debt energized profit taking, the level of indebtedness was of no consequence. All of this changed – or should have changed – after the mountains of debt accumulated in the financial sector collapsed, bringing the global economy to its knees two years ago.

It is equally ironic that a quasi-governmental body – the Federal Reserve – pumped, with no transparency, $9 trillion in loans into the private sector to rescue corporations from the consequences of their collapsing debt load, as recent revelations have shown. We now know that the private sector, primarily the financial industry, hung by a slender thread thanks to years of promiscuous borrowing to fuel scandalously risky speculation.

Despite this indictment of private sector abuse of debt, policy makers have offered few guarantees that private sector debt will not again paralyze the global economy. Nor is there any hysterical concern over private debt with the opinion makers who protest so loudly over public sector debt.

US Debt: A Dose of Terrorism

With the federal deficit reaching $1.5 trillion in 2010, it is understandable that some would react to the figure with alarm. It is formidable figure, but what does it mean?

Actually, it means very little. There have been Federal budgets that have shown more percentage growth of the deficit or more growth against other measures such as GDP. Some of these budgets have correlated with good times, some with bad times. There is no strict relationship between budgetary frugality or generosity and prosperity.

Some deficits have resulted from reduced tax revenues, some from leaps in government spending. Interestingly, some of the biggest recent boosts in government spending – the great sin of debt scolds – have occurred under the Presidential stewardship of professed archenemies of deficits (Reagan, Bush I, Bush II).

Without exploring the details of government spending, there is no factual basis for alarm with the absolute or relative size of a Federal deficit. In the case of the current deficit, there are good reasons to examine why the US deficit is growing. As Jeff Madrick points out (NY Review of Books, 12-23-10), “…almost all of the projected deficit through 2020 will be the result of three factors: the recession, the tax cuts of the early 2000s under George W. Bush, and the hundreds of billions of dollars of war spending.” I would add that the continued growth of the costs of private medical services passed on to the public sector also adds substantially to these projections. All are social evils worthy of attacking, but not because they add to the deficit.

Other liberal economists, like Dean Baker and James K. Galbraith, have demonstrated loudly and conclusively why there are no theoretical reasons to fear an expanding Federal deficit or higher levels of public debt (apart from state and municipal budgets that are limited statutorily to balancing revenues and expenditures). They vigorously dispute the inappropriate parallel with family budgets and the catastrophic consequences of individuals spending more than they make. The Federal government does not endure the pain of the profligate neighbor who runs the credit card to the limit. Instead, the Federal government can borrow extensively through the sales of Treasury securities, particularly at a time when interest rates are at an historic low. Moreover, the Federal Reserve’s QE2 program is currently attempting to drive those interest rates down further through $600 billion in Treasury purchases, but with a different goal in mind.

Sane people will find no plausible explanation for the intensifying debt scare in the US, beyond political manipulation. And crude political manipulation it is: a ruse akin to the hysteria generated by the “war on terrorism.” With fear piled upon fear, politicians and policy makers are exploiting the ensuing panic to vigorously attack both the already inadequate safety net and working class living standards.

Political elites and their minions have taken to heart the slogan “every crisis presents an opportunity” by turning it on its head through a campaign of disinformation and fear mongering. Instead of taking up the cause of the twenty-five million unemployed and underemployed, they have seized the moment to impose even greater hardships on the vast majority of US citizens.

It took very little to rouse President Obama and his Administration to join the baying dogs of debt hysteria. With the creation of the Bowles-Simpson Debt Commission, he embraced the hypocrisy of debt terrorism. And his recent freezing of the wages and salaries of Federal workers justified by deficit concerns only underlines both his dishonesty and his callousness. His sharp right turn from his already right leanings should chasten those still star-struck with “change that you can believe in…” And those who still posture Obama as a progressive champion should be boiled in oil. His recent agreement to establish a NAFTA-clone trade pact with Korea has stirred great anger in the upper echelons of the AFL-CIO, the same labor leaders who hailed his pledge to revisit NAFTA and make it more labor-friendly.

The plain and simple truth is that the debt hysteria has no sound basis in economic theory or experience. Instead, it is a political ploy to raise fears to justify imposing austerity on workers, youth, minorities and the elderly. Its quick and ready acceptance by opinion makers demonstrates a callous dishonesty.

European Debt: Plundering the Weak

The European debt fears that have brought panic to the EU leaders and a wave of austere budget cuts has a real villain, but it’s not the profligate spending and big deficits that the media shrilly reports. Instead, it is hedge fund managers and a motley crew of other powerful financial pirates – Barron’s magazine cleverly calls them “bond vigilantes” -who understand the dynamics of international debt markets and prey on the weakest players. The wondrous thing about the new financial instruments devised in the late-twentieth century is that they allow and invite as much or more money to be made betting on failure as betting on success. Moreover, the financial predators have the weight in the market to force panic and reap profit from the chaos they produce.

These vultures ply on the fact that the weaker economies in the European Union are caught in a deadly vise: they owe much of their debt to foreign banks and they have surrendered monetary powers by replacing their sovereign currencies with the euro. First, Greece came under fire beginning in the fall of 2009 with a massive campaign driving the cost of insuring debt and acquiring loans. Of course these pessimistic bets further stressed Greece’s ability to muster funds, leading to even further aggression on the part of vulture capitalism through even more pessimistic bets against Greece’s ability to repay debt. And thus the noose tightened around the Greek economy.

As a result, Greece was forced to surrender its sovereignty and economy to the leaders of the European Union and the International Monetary Fund. In return for loans and guarantees that dispersed the vultures, the EU and IMF dictated an austerity program that drastically lowered the standard of living of the Greek people. Only the most militant sector of the Greek working class – the Communist Party and PAME – offered any real alternative to this devastating aggression.

The debt vultures turned next to Ireland later in 2010: same process, same result. With the EU and IMF now effectively ruling Ireland, the already shrunken Irish public sector is further squeezed with a drastic cut in jobs and public services piled onto an existing unemployment rate of 14%.

With the Greek and Irish carcasses picked clean, the aggressors are turning to Portugal, another country carrying debt and hamstrung by the acceptance of the euro as its national currency. And Spain - perhaps even Italy – is vulnerable to future attack.

In an unusually candid admission, The Wall Street Journal wrote of this insidious process in late November (Traders’ Targets: Portugal and Spain). Author Cassell Bryan-Low concedes that “hedge-fund managers are cautiously setting their sights on potential problems in countries such as Portugal and Spain…[T]hey are expecting more bad news to come, predicting that borrowing costs elsewhere will become prohibitive, potentially forcing other countries to also seek a bailout or restructure their debt.” Bryan-Low notes that some traders are a bit gun-shy because “the notion of betting against Europe’s peripheral economies has… become an emotional topic amid debate whether such moves have contributed to those countries financial woes…” Some officials “have called for the banning of certain instruments, such as derivatives…” Several fund managers are cited who confirm “bearish bets” on Spanish debt, with one stating ominously, “I don’t think those issues are going to go away, which is why the euro is going to stay under pressure.” The carnage continues…

Vulture capitalism preys on countries outside of the euro-zone as well. As I have shown previously (IMF Debt Hypocrisy: Sticking it to the Hungarians http://zzs-blg.blogspot.com/2010/08/imf-debt-hypocrisy-sticking-it-to.html), the game is really not about reducing deficits or debt levels, but about imposing the will of international capital on vulnerable countries and hammering the conditions of life for working people. When the Hungarian government proposed raising taxes on banks to reduce the deficit, their international overseers became hysterical - threatening repercussions - despite the fact that Hungary would meet the targets set by the IMF. It was not defiance of debt-reduction goals that brought on censure, but the refusal to put the burden on the Hungarian people.

Since the article, the defiant Hungarian government has pledged to lower personal taxes and boost welfare spending while increasing taxes on banks, telecommunications, retail businesses and energy companies, to raise revenue by $2 billion. This defiance has brought on a severe downgrading of Hungary’s credit rating to near junk status by Moody’s credit rating service. The prime minister’s office bluntly, but accurately, characterized this move as a response to “measures that hurt the interests of international capital in the short term” as reported in the back pages of the WSJ (12-7-10). So there is another path to debt management, but one would never know it from the actions of the cowardly governments that rule in the rest of Europe. Instead, they surrender their national sovereignty with a whimper.

Today, the capitalist class leads with the debt card in its efforts to discipline and dominate the working class. The failure to understand this strategy disarms working people caught in the throes of a new offensive in the class struggle. Just as we exposed the hypocrisy of George W. Bush’s contrived invasion of Iraq, we must bring light on the hypocrisy and deceit of the debt scare.

Sunday, December 12, 2010

Ireland is a young country, established only 88 years ago after centuries of domination by its powerful neighbor the United Kingdom. After liberation, the country remained largely in the shadow of its former colonial master, serving as a source of cheap immigrant labor. Irish youth would leave their homeland, portrayed in popular lore as a quaint land of small villages and crude agricultural economies, for work in London or other UK cities. The more ambitious would venture to the US, where the earlier successes of millions of Irish immigrants elevated a few to the upper echelons of wealth and power.

But with the emergence of a new era of intense capitalist growth spurred by unfettered and ever-expanding markets, technological advances, and financial daring, Irish policy makers decided to join the race to success promised by this developmental model.

Enthusiastically, successive Irish governments followed the scriptures of neo-liberal dogma. Possessing an educated, but low-wage work force, they enticed transnational corporations to locate in Ireland by offering them an obscenely low corporate tax rate, the lowest in the euro-zone except for Bulgaria. Tax rates for the wealthy were lowered, including a constantly shrinking capital-gains tax.

Given domestic growth, the financial sector was encouraged to exploit the newly found prosperity with an orgy of lending and investment in housing, commercial real estate, and the new, exotic instruments common to the financial sector over the last thirty years.

As a result, Ireland and the Irish economy were heralded by opinion makers, politicians, and the gatekeepers of capitalism, the World Bank and the IMF. With a public relations flourish, they dubbed Ireland the “Celtic Tiger” of the world economy.

Today, the tiger is on its deathbed.

Slammed by the global economic downturn, Ireland now stands as an example of all that is rotten in the global economy, all that is misguided in the neo-liberal program, and all that is painful in an unfounded faith in capitalist social relations.

With the pace of economic activity decelerating rapidly in 2008, the Irish government recognized that declining tax revenues placed stress on its budget. Where some governments sought to use public funds to stimulate growth, Ireland began a process of government austerity that would please the financial world and hew to the most dogmatic of neo-liberal principles – the budget was substantially in balance at the end of 2007.

But overlooked by Irish officials, the banks were carrying enormous debt with little prospect of realization. As in the US, the Irish financial industry had supported an orgy of real estate development that could only prove of value if the “Tiger” kept its furious pace of growth. Foreign banks, principally in the UK, France and Belgium, added their capital to stoke the fires of speculation. When this growth collapsed, the prospect of recovering these loans also collapsed. In addition, Irish banks, like their US and Icelandic counterparts, engaged in a risky speculative game with the flashy, but risky financial instruments invented in recent years. The potential losses were staggering. The banks tried to hide their losses. Officials pretended they didn’t exist.

As late as May 2008, Irish regulators assured the public that the banks were “sound and robust.” But early the next year, the government injected around 7 billion euros of public funds into the banking industry. And for the next two years, the Irish government denied that the banks were collapsing while adding billions more of public funds to rescue them.

In the fall of 2010, the Irish finance minister called for a final, honest accounting of the costs to the public for the bankers’ folly. The figure – undoubtedly an underestimation – totaled 50 billion euros or roughly US$ 50,000 per household.

While it is true that the collapse of the Celtic road to prosperity is an indictment of the policy choice of free market “cowboy” capitalism - the zealous faith in the dogmas of neo-liberalism - there is more to this tragedy. Unspoken in accounts of the Irish developmental debacle is the role of international finance capital in exploiting the crisis and driving Ireland into the hands of the European Central Bank and the IMF with a painful loss of national sovereignty.

Over the last thirty years, the financial industry has constructed and employed new, sophisticated methods of garnering profit from betting on negative outcomes as well as success. Hedge funds, private-equity firms, as well as big banks gain as much or more from exploiting weakness and economic vulnerability as they once did from supporting strength and growth. Consequently, they pounce on wounded economies, driving up borrowing rates and risk assessments while betting on default. This financial attack creates a disastrous, unending escalation of the costs of financing and refinancing debt that chokes off a government’s ability to fund even its most critical functions.

We saw this process in Greece last fall and winter. And we saw it again in Ireland this summer and fall: since the summer of 2010 the spread between the yield necessary to sell Irish government bonds and the yield of stable German bonds has jumped four-fold. This is an instance of financial aggression, pure and simple, with the next target undoubtedly the economic sovereignty of Portugal.

Inevitably, a country under this withering attack from the financial sector must turn to others for debt relief. In the case of Ireland, the European Union and IMF are staving off the assault with an 85-billion euro loan. In return, the Irish people surrender their sovereignty and submit to a severe further dose of austerity: the minimum wage is to be slashed by 12.5%, welfare benefits will be cut, pensions reduced, health care denied, public workers’ jobs eliminated, and the costs of education increased. This comes on top of an existing 14% unemployment rate. Once again, Irish youth are leaving in droves.

Ireland and its economy are effectively under the stewardship of the European Union and the IMF.

It is common, especially on the Left, to blame the Irish tragedy on the foolish belief that markets and business-friendly policies will bring prosperity to a poor country competing in a world of rapacious corporations and more advanced economies. While this is true, it misses the important point that the predatory international financial sector looms over a country’s effort, ever ready to pick the bones should that country falter. There is capitalism and then there is vulture capitalism.

Wednesday, November 24, 2010

As the number of Debt Commissions multiplies and media gasbags generate hurricane-like forces and hysterical fears of government insolvency, I’ve decided to surrender to the madness and propose a fresh, creative approach to debt reduction. My approach has the added value of requiring no budget cuts or tax increases. Instead, the solution will be found in cutting waste and acquiring new revenue sources hitherto unexplored.

And all of these revenues are generated by tapping the hidden potentials of the market place, a solution that will endear this plan to the vast majority of free-market economists and policy jockeys.

In its essence, my program exploits the vast assets currently wasted in our two-party political system. Instead of holding costly primary elections, I propose that we auction off the candidacies for the two parties with all proceeds going to the Federal budget. And instead of holding costly electoral campaigns, we adopt a system based upon cash votes: one vote for every dollar spent. The nine months currently devoted to canned speeches, staged rallies and meaningless debates could serve as an ongoing telethon with the dollars (votes) pouring in with a huge surge near the end. Again, all proceeds would go to the Federal budget. The beauty of this scheme is that the process is totally transparent and the results very likely close to the ones we usually get with the current electoral system.

But there is more: We could sell the naming rights to all of the House and Senate seats. The 18th Congressional District of state X might become the Halliburton or Goldman Sachs seat. The Delaware Senate seats could be sold to Dupont and the credit card industry. The possibilities are endless.

Likewise, the naming rights to departments, public buildings, airports, parks and roads might well generate millions to the Federal government. Admittedly, this might result in some awkward moments – the Richard Nixon Justice Department, the Strom Thurman Equal Rights Commission, etc. – but a small cost for market efficiency!

Instead of all the lobbying money currently wasted on campaign coffers and personal graft, we might consider installing turnstiles in government offices and agencies, charging lobbyists by the hour or earmark.

We might also consider marketizing the judiciary by selling judgeships and auctioning decisions. Undoubtedly, the legal profession would object since there would be little need for private attorneys, but the resultant revenues could go directly to the Federal budget, thus aiding widows and orphans.

The market-based solutions to the widely acclaimed deficit crisis are limited only by our imagination. Instead of slowly choking public education with privatization schemes (charter schools), why not simply construct a government fee schedule that allows youth to buy their way into a future career or profession? Of course, their fees would be refunded if they failed to meet the standards minimally necessary for performance in their fields. Doctors who consistently harm their patients would be asked to purchase a new profession more consistent with public welfare. Surely this would meet the requirements of market rationality.

For those without the funds to bid on prestigious professions, a government lottery could sort out those relegated to low-paying service jobs, those destined for prison, and those unhappily cast out as redundant. As always, the proceeds of this process would go to ease the deficit.

The beauty of this debt-reduction scheme lies in its total transparency. There are no hidden agendas, secret meetings, under-the-table deals; all transactions are in the open. While it produces virtually the same results that current practices deliver, it dispenses with the hypocrisy that infects the present political system. Moreover, the funds currently absorbed by our parasitic class of consultants, political staffers, office holders, campaign professionals, media moguls, etc. are shifted to debt reduction. It is no exaggeration that this market-based approach could produce billions of revenue to bolster the Federal budget.

Some may object, citing the absence of democracy in this approach. But this is a petty complaint, given that the results would most likely be the same as our current way of doing things. Social scientists call this an isomorphism: The processes may appear different, but operate the same and produce the same outcomes. Less kindly, Marxists call our current political system “bourgeois democracy,” a political doctrine that postures as democratic while functioning to produce and reproduce rule by wealth and power.

Undoubtedly, those who persist in defending the current two-party system will be outraged, condemning this proposal as cruelly cynical. Indeed it is. But the option is to reject the vulgar entertainment we accept as democracy and fight for a third peoples’ party or a new democracy. Anything less is rotten with hypocrisy.

Tuesday, November 9, 2010

I have slogged through uncountable commentaries on the mid-term elections. Many have offered useful insights on an event that will no doubt shape the political direction of the next two years. Yet, there is little to surprise in the outcome for anyone following recent and long-term developments in the US political system.

Two years ago, I projected that the Obama presidency would likely follow the pattern of the Carter presidency. Both came after a deep crisis of legitimacy: in one case, the Nixon debacle, in the other, the disastrous Bush presidency. The candidates postured as outsiders and in both cases they made impassioned pleas for change with a vague commitment to a “progressive” agenda. But in the end, the two administrations proved to be shaped by and acquiescent to a ruling-class agenda. The election of both candidates energized, protected and promoted a two-party system in need of credibility.

In another contemporaneous post, I drew upon the venerated I. F. Stone, who, groping for understanding of his disappointment with the Kennedy tenure, wrote of the enormous institutional forces that blocked any deviancy from the ruling-class agenda in the unlikely event that any President should truly want to stray.

In all three cases, performance fell far short of public expectations. In all three cases, the left mistook cosmetic adjustment for real change.

With the exception of a brief interlude of New Deal vigor during Lyndon Johnson’s presidency, spawned by a martyred Democratic president, an overwhelming defeat of the Goldwater extreme right and the pressures of a militant Civil Rights Movement, this has been the pattern of Democratic presidencies for the last fifty years.

While many know this history, few see it as a pattern. Since the marginalization of the Marxist left, few find or even look for meaningful connections and continuities linking political events. Instead, the media and establishment punditry portray the US electoral process as a regular contest, fought around carefully crafted personalities, shifting demographics, debate performance and the poll results of the moment disconnected from class and process. They neither look for nor find the deeper structural forces that determine how the game is played and who wins.

A deeper look exposes the internal logic of a two-party electoral system in a class-divided society. Without a radical challenge, such a system inevitably produces rule by wealth and power over the popular will. As money and wealth determine both the candidates and the outcomes, the political leaders become more and more distant from the people, something the Tea Party movement knows and exploits effectively.

Further, the issues raised in electoral campaigns function to establish a space between the candidates, necessary to legitimize the elections in the eyes of voters. But once elected, the differences between candidates prove illusive. Thus, we find more and more commentators referring to the Bush/Obama continuum. On war, immigration, civil liberties, etc, we are all too familiar with the shortcomings of the Democratic Administration and its legislative allies. But the Republicans demonstrate the same cynicism toward their promises: both Reagan and G.W. Bush ran as deficit hawks, but oversaw some of the largest government spending splurges in history, all in the interest of the military-industrial sector of monopoly capital. This cynical manipulation of the electoral process is neither an historical accident, nor an aberration of an otherwise democratic procedure, but a logical development of a two-party system in an increasingly class-divided society.

Some will find this overly deterministic, suggestive of a fatalistic course to US politics. Still others will find this dismally pessimistic. It is neither. It is, instead, a realistic assessment of where our neglect of the structural limitations of the US two-party system has taken us. Any response to the power of money, the corruption, and the cynicism of today must address these structural impediments. It is not enough to live in a fantasy world of marginal reform, incremental change, or slavish faith in a corporate-sponsored party.

Just as careful study reveals the rigid logic of the two-party system, a long look at periods of progressive change expose the genuine alternatives to a system that trivializes public engagement and guarantees results friendly to the wealthy and powerful. All important reversals of the two-party trajectory came with the building of mass movements driven by peoples’ causes – the plight of the rural poor, the exploitation of industrial workers, against imperialist wars, for civil rights for minorities, equality for women, etc. Insofar as these movements maintained a distance from the two parties, along with a dogged commitment sustained regardless of the party in power, they were able to leave an indelible mark on the political landscape. Insofar as they hitched their movement to the Democratic Party or Republican Party, they were quickly absorbed into the electoral campaign machinery, with their cause tacked on to the end of a long list of Party priorities. Again, these are historical constants that must be addressed going forward if we are not to continue down the same ineffective, well-worn path.

Recognizing that in the US today we are accustomed to preferring score cards to theory, I suggest we consider the voting patterns in the mid-term elections. Exit polls show that the groups most supportive of the Democrats in the election were: African-Americans, Hispanics, youth, union households, and urban dwellers. Yet they were the groups that benefited least from two years of a Democratic Executive and Congress. These are the same groups that demonstrated the most enthusiasm for change and have suffered the most from a profound economic crisis. They have witnessed and will pay for the enthusiastic rescue of Wall Street and the corporate sector, while their own interests have been neglected or trampled.

Until we come to grips with this glaring contradiction, we will continue to repeat the same mistakes with the same disappointing results.

Thursday, November 4, 2010

Do I have a grudge against the Nobel Prize committees? A few weeks ago I launched a broadside against the awarding of prizes to three - no doubt well meaning and diligent - academic economists whose work on unemployment was postured as earthshaking contributions to resolving the current crisis. At the same time, I took a pot shot at last year’s Nobel Peace Prize going to the serving US President, an award that likely caused him some embarrassment after his dramatic escalation of the war in Afghanistan. And I couldn’t help noticing that my colleagues at Marxism-Leninism Today posted an article by Stephen Gowans that loosed his acerbic, sharp pen to blast this year’s Nobel Peace award granted to Liu Xiaobo. Gowans’s considerable talents conclusively demonstrate the stealth political agenda behind the committee’s decision. One is staggered by an international award earned by the recipient’s singular achievement of soliciting and attracting a mere 10,000 on-line signatures on a petition that, in effect, calls for the overthrow of the Chinese government.

But let me be clear about this: my quarrel is not with the recipients, at least not in past polemics. Rather, it is with committees that posture as unbiased and speak with the conceit of service to mankind. Instead, it is more and more obvious that the awards serve the ends of Western elites and legitimize their view of the world.

Take, for example, the 2006 Peace prize awarded to Prof. Mohammed Yunus for his pioneering work on what came to be called “micro-lending”. No doubt micro-lending – the idea that tiny loans to impoverished people could or would raise people from poverty – might, in some cases, be effective. Undoubtedly a small loan to a budding entrepreneur could launch a new, successful career in one of the world’s many economically barren areas. Of course informal loans in these areas are already a fact of ordinary life. Some are generously granted by family or friends, some are extended by usurious loan sharks. In any case, while granting that some could be lifted out of poverty with a modest loan, a financial helping hand, only the witless or perhaps a capitalist sensing potential profit would pose micro-lending as a solution to world poverty. Generously, I doubt that even Yunus ever saw the practice as the solution to mass poverty.

Nonetheless, the media, a gaggle of liberals, and many pundits hailed micro-lending as a miraculous answer to grinding poverty. In a striking display of ostentatious compassion, celebrities tossed money at the micro-lenders, puffing with pride over their genuine sympathy for the downtrodden. As the word got around about micro-lending, a groundswell of enthusiasm and a basket of awards and prizes followed, culminating in the Nobel Prize. Even Bill Clinton, the Terminator of the US welfare program, hailed micro-lending as one of the truly great poverty-reducing instruments.

As the micro-lending mania flourished, I thought that this too would pass. Like so many faddish schemes of the past, I saw micro-lending as one more fashionable way to turn liberal eyes away from the true causes of poverty in the developing world. Instead of dealing with the legacy of colonialism and the continuing pillage of imperialism, micro-leading gives comfortable people in the West a guilt-cleanser, a measure of smug acknowledgement – like the once popular “CARE” packages – that poverty was being whipped. It is certainly less costly than repaying the teeming masses for centuries of exploitation, brutal domination, and neglect. And I was well aware of the argument that a mere $200 micro-loan could help a poor villager establish a bicycle shop. But I wondered how the other villagers could rise from poverty by also setting up bicycle shops.

But lurking in all the palaver over micro-loans was the interesting micro-fact: lenders generally charged between 25 to 100% annual interest. Now I don’t know what village loan sharks charge, but my imagination stretches to envision their pushing much beyond these bounds. Granted, their collection methods might be considerably more severe than the beneficent micro-lender. To my mind, the micro-lending mania produced the aura of the pay-day loan shops that prey upon the working poor in the US.

But the micro-lending phenomena proved to be more than a passing fad. Today in India, one of the largest “markets” for micro-loans, there are more than 25 million borrowers and loans total well over 200 billion rupees. Total loans have grown nearly six times in three years. Banks and private equity firms have plowed over $4 billion this year into what has become a significant industry. The largest micro-lending firm recently offered $350 million in shares on the Indian stock market, according to The Wall Street Journal (10-29-10). Capitalism has discovered micro-lending.

Whatever noble intentions may have spurred the micro-lending movement, it was quickly stripped of any such sentiments when the financiers discovered it. Like efforts in the US to encourage low-income home ownership, the financial predators saw only profit. And they leaped at it, pushing the limits as far as the last dollar (or rupee) of profits could be squeezed out. The parallel between this exploitation of the most vulnerable in India and our own tragic exploitation of the poor through sub-prime mortgages is glaringly apparent.

It took a rash of suicides by borrowers to bring these abuses to the attention of Indian government regulators. The headlines in The Wall Street Journal tell it all: India’s Major Crisis in Microlending: Loans Involving Tiny Amounts of Money Were a Good Idea, but the Explosion of Interest Backfires (10-29-10), Backlash in Microlending (10-30-10). All debt payments have been suspended by the authorities and loan agents have been arrested in the Indian state burdened with 30% of the country’s micro-loans, leading WSJ writers to conclude that “the microlending movement… has in recent weeks fallen into chaos.” Once again financial predations result in chaos and crisis, a pattern that only escapes those willfully blind or cornered by self-interest.

The naked truth is that lending, like insuring, is a socially useful function if and only if it is democratically administered and publicly sustained. There is no rational or moral justification for engaging private interests. A disinterested public administrator armed with default data, an available loan fund, and a reasonable sense of social priorities and judgment of character could dispense loans untainted by the distraction of profits. Profits only distort the rationality or efficiency of this necessary social function.

The same could be said of insurance. Armed with actuarial tables (usually assembled from data collected from government agencies), a schedule of costs and benefits can be constructed by a competent statistician. It is an easy step to fairly and equitably distributing these costs and benefits in the most efficient and democratic way. Again there is no justification for introducing private gain into this process. It’s only an invitation to chaos and crisis.

Sunday, October 31, 2010

Data on US profits for the second quarter of this year are well worth studying, not only for what they say about the health of the corporate sector, but also for what they reveal about the structure of our economic system and the priorities of our policy makers.

Commerce Department figures show that after-tax profits rose 3.9% from the first quarter and a staggering 26.5% from the same quarter in 2009. This year-to-year percentage growth is the highest ever recorded by the Commerce Department without factoring for inflation. (The figure is even more impressive given that virtually none of the growth is due to inflation over the last year!)

Perhaps even more telling is the percentage of national income accounted for by profits. Well over 9% of national income in the second quarter of 2010 counted as profits, the 3rd highest portion since 1947. Interestingly, the percentage of national income was only marginally higher in two quarters of 2006 when the unemployment rate was 4.6% at the peak of the last economic expansion.

Analyzing the data, The Wall Street Journal (10-4-10) concluded that those corporations making up the Standard and Poor’s top 500 corporations – the core of monopoly capital – actually grew by 38%, returning $189 billion or 15.6% of all after-tax profit.

WSJ analysts underline the profit trends by noting that profits are up 10% over 2008 though revenues are down 6%. Monopoly corporations now make 8.4 cents on every dollar of revenue, when they made only 7 cents on every dollar in 2008. The Winners’ Circle

For corporations, the numbers are spectacular. They indicate a complete recovery of the profit momentum lost in 2008 and 2009. Since the early 1980’s, after-tax profits - as a percentage of total national income - have marched upward and onward, indicating that more of the wealth created in the US has been distributed to the corporate sector. At the beginning of the 1980’s, less than 5% of national income found its way to corporations as profits. Today, that percentage appropriated by corporations, especially monopoly corporations, has increased to nearly 10%.

Several interrelated factors have contributed to this shift of wealth to corporations from the rest of us.

First, the rate of exploitation – the relation between the share of wealth appropriated by the ownership class and the share left to the workers - has increased dramatically. Labor’s bargaining power has diminished with the decline of both union density and militancy. Hourly wages in the US have been stagnant or declining throughout most of the last thirty years while productivity has increased consistently. The average hourly wage (adjusted for inflation) for production and non-supervisory employees has hardly budged since 1978. Indeed, nearly two-thirds of ALL workers average hourly wages have stagnated since 1978. At the same time, benefits have been cut, shifted or eliminated for most workers. Given the growth of the national income in this period, it follows that more of society’s wealth is available to the corporate sector, its managers, investors, and parasitic minions.

Secondly, the growing significance of financial instruments and the financial sector has prodded corporate profits to new heights. With the stagnation of mass purchasing power brought on by rapacious exploitation, the financial sector has established borrowed money as the vehicle for improved living standards for most US citizens, given that capitalists have the money and the rest of us do not. Consumer debt – mortgages, credit cards, student loans, home equity loans, etc. – has replaced wages as the means to a better life for the vast majority of those outside of the ownership class. Consequently, more and more of corporate profits were represented by deferred, projected, or even hypothetical wealth – the wealth that would be accumulated when all debt is eventually cleared. The financial sector went even further and through the creation of financial exotica (instruments derived from the real-world contracting of debt) claimed further profits from the buying and selling of these artificial creatures. Of course it was the collapse of this debt house-of-cards that brought the world economy to its knees in 2008 and 2009. And yet the share of total corporate profit attributable to the financial sector remains over 40% despite this destruction of deferred, projected, and hypothetical profit.

Thirdly, the actions of policymakers – lawmakers of both parties and their technocratic vassals – have aided and abetted the corporate drive for profits. By privatizing and commodifying many public assets, they have widened the arena of profit taking. By turning a blind eye to corporate migration to low-wage labor markets, they have pressured wages to the level of the lowest competitive nation. And through removing socially responsible restrictions on corporate activity, they have allowed corporations to escape the costs of compliance, even at enormous social costs born by the majority.

The creation of public-private partnerships by lawmakers and enthusiastic administrators has transferred enterprise risks to the public while subsidizing private profit taking. Likewise, tax policies have shifted to remove nearly all burdens from corporations. Conversely, policymakers have weakly submitted to an extortionate con game of credits and infrastructure subsidies to keep old businesses or attract new plants, warehouses, or other private investors. Local, state and regional authorities are caught in a vicious competitive spiral of ever more generous bids to retain or attain a business. The game ends when the last competitor falls exhausted. And often the winner lives to regret the enormous costs of success.

And, of course, the government has embarked on a massive and unprecedented bailout of financial institutions and other major industries over the last two years, a bailout that brought these corporations from their knees to new heights of profitability. Likewise, the widely heralded stimulus program channeled vast sums to private firms – unlike the public works programs of the New Deal – further propping up profits with little impact upon employment.

These three processes – intense exploitation of labor, the dominant role of the financial sector and the subservience of policy to the interests of capital – combine to explain the explosive growth of that share of US national income flowing to corporate coffers. They also explain the cracking of the foundations of our economy over the last few years.

Conjuring Consensus

The explosive growth of after-tax profits as a share of national income over the last three decades was hardly a secret; it was not a closely held conspiratorial plot; nor were the events and policies that enabled this development out of sight of the public. Nonetheless, the corporate onslaught met feeble resistance.

Thanks to a corporate-friendly media, a compliant punditry, and a public diverted by entertainments besting the most elaborate Roman circus, the profit gouging agenda became the widely accepted road to general prosperity.

Sure, the early Reaganite slogan of “trickle down” growth – the notion that the success of the wealthy would seep down into the lower classes – was met with significant skepticism, even derision. But by the time of the Clinton administration, this idea was deeply embedded in mass consciousness. Captured by the more colorful metaphor that “a rising tide lifts all boats,” the idea that the success of the most favored, the most advantaged, would bring a general rise of social good planted deep roots in the public psyche. For most US citizens, it became an obvious truth that corporate success - growth, increasing profits, and stock appreciation - led to employment and rising living standards. We might express this “truth” with the simple formula: corporate profits→growth→jobs→general welfare.

It was this thinking that bolstered the notion in the labor movement that workers should support “their” corporations – US-based corporations – against “foreign” corporations, despite the fact that the modern monopoly corporation knows no borders. Similarly, people came to believe that government should guarantee the health and profitability of their employers in order to secure and create jobs and, in due course, generate a rising standard of living for employees. In turn, if profitability is accepted as the sole, decisive factor in social progress, then employee concessions often become a necessary evil that smooths the road to further progress.

The triumph of the sovereignty of profits left little room for alternative thinking that might cast corporate profits in a different light. This identification of profits and general prosperity smothered considerations of public ownership and the operation of socially beneficial enterprises, redistributive policies, democratic governance of corporate activity, or even an open discussion of the biblical notion of a “fair profit.”

The Chain is Broken

Despite the brutal economic facts of the last decade, few have shown the vision or courage to admit that the key links between profits and prosperity have been shattered. Economists acknowledge that the upturn after the recession of 2001 was decidedly a “jobless recovery,” a recovery with little to offer the majority of working people other than more debt. Moreover, the profit recovery since the 2009 economic nadir has accompanied a stubborn, unmoving near-depression level of unemployment. The volcanic rise in profits (206% for the S&P 500 in the last quarter of 2009 against the same quarter in 2008) stands in sharp contrast to an equally dramatic change in the misery indices: declining incomes, greater inequality, rising poverty rates.

Even those deafened by the constant media babble or blinded by political flimflam should now see through the humbuggery of placing human advancement in the hands of profiteers. The old argument that corporate avarice, through the unbiased operation of the market, will benefit us all must surely be retired.

Economists concede that the next decade - called by some, a "lost decade" - promises, at best, a feeble recovery with likely persistent unemployment, greater impoverishment, a retreat of social securities, and ominous uncertainties for most outside of the ownership class. Thus, the first two decades of the twenty-first century will have featured a decided retreat from the prosperity promised by a profit-driven market economy. Many, if not most of the people will have experienced the better part of their adult life in the shadow of these tribulations. The hopeful notion that the next generation will do better is severely threatened, maybe shattered. Indeed, it is now apparent that few boats are lifted with a rising tide driven by profits.

The responsibility for exposing the failure of profit-centric economic policy falls squarely on the US left. While the US left is small and with a narrow circle of influence, it alone can begin to project and popularize an alternative economy that reduces or eliminates the decisive role of profits. It alone can offer a road apart from the path paved by corporate self-interest.

Some falsely counter pose organizing and agitating for a just, democratic alternative economy – to my mind, socialism – with political work on the margins of mainstream politics. For decades, this argument has surfaced time and again with every election cycle or legislative session. The struggle for socialism, the argument goes, is distant and difficult, while we – the left - might have an impact on the immediate issues and options at play in the two-party charade. This is, I believe, a dangerous brew of egomania and complacency. The reality is that the left has neither the bucks nor the bodies to shift the balance in the big show (nor is engagement welcome, except at the price of any left identity). And when left engagement does threaten to upset the political trajectory (for example, the Nader campaigns), these same “soft” left advocates roundly condemn the effort.

But in the end, it is possible to do both: one can, if one likes, participate energetically in the big game – primaries, legislative lobbies, etc. – with the hope of moving the ball incrementally forward. And one must fervently engage our foes on every level, whether it be in the neighborhood or around individual issues. At the same time, one can and must organize and agitate for an alternative to the profit-centric dogma. Without a determined effort to spark and fan the embers of extraordinary, fundamental change, we are doomed to see our future sink in the face of corporate power and greed.

Tuesday, October 19, 2010

Many see the Nobel Prize as the Super Bowl of intellectual life. But more and more, it appears to be like another championship belt in the World Wrestling Federation. Where awarding the “Peace” prize to the Commander-in-Chief of the world’s most war-mongering power tarnished the award, the recently awarded prize for economics brings the contest down to the level of American Idol.

“Economic science,” as its practitioners refer to it, has moved in two directions at once: further away from the reality of economic life and closer to self-sustained scholastic exercises understood and appreciated by the few who work in those same close quarters. Yet never does it travel too far from the ranch of apologia for the holy scriptures of capitalism.

Capitalist triumphalism – the view that all deep questions about the fundamentals of economic structures and activity have been settled – dominates and informs recent academic research in the field. If one suspects a parallel with the religiously driven dogmas of Ptolemaic cosmology, it is there to be found. The world of modern academic economists assumes, with no need to prove it, that economic activity is and can only be understood with the basic units of markets, individual actors and their sets of interests, acquisitive motives, and private ownership. This is the game and the only game. Outsiders – Marxists and renegades from economic scholasticism – are not allowed to play, since they fail to abide by the rules.

But sometimes reality intercedes with brute economic events that challenge this smugness. As the often-brilliant John Strachey wrote in 1935 during the midst of the Great Depression:

The capitalist world… has its experts, its economists. The phenomena of crisis lie, however, outside the scope of their science… They have evolved a science of economics which seems to explain the exact workings of the capitalist system, and (incidentally) justifies those workings in every respect. There is only one difficulty. The system periodically refuses to work… (The Nature of Capitalist Crisis, p.8)

Today, we are in the throes of a similar crisis and economists are similarly fumbling for explanations and solutions.

In the spotlight of today’s crisis is the seeming intractability of extremely high unemployment, a problem even more embarrassing to capitalist apologists in light of record-setting profits.

Thus, many, even far outside of the academic world, expectantly turned with great interest to the announcement that three economists would share the $1.5 million Nobel Prize for purportedly insightful work on unemployment. Peter Diamond, Dale Mortensen, and Christopher Pissarides won the 2010 prize for their “groundbreaking ideas that help explain why unemployment remains stubbornly high in the US and other developing countries,” as hailed by The Wall Street Journal.

Sadly, any such expectations would be quickly shattered. The core problem addressed by the three scholars is not the unemployment of the moment, but the relatively high unemployment associated with the European economies of the 1980s and 1990s. At that time, France, Germany and other advanced economies enjoyed strong growth, rising living standards, viable social welfare benefits, but relatively high unemployment – high relative to the theoretical fundamentals of economic dogma. Conventional thinking dictated that growth and rising standards should motivate Europe’s unemployed to seek the available jobs, but instead many chose to obstinately accept the benefits of the social welfare system while settling for a measure of leisure in an abundant society. Essentially, they were redundant, but without courting starvation, some choosing to write poems or backpack through Europe like the sons and daughters of the idle rich. In the eyes of those benefiting from the imposition of strict discipline upon labor, the unemployed were not victims, but outlaws.

Not only did this violate the logic of market forces, but it also challenged the culture of the post-feudal work ethic as explained so well by Max Weber. Since jobs were available, economists - like the three laureates - took on the task of explaining this phenomenon and thus providing policy tools to restore order to economic orthodoxy. The intellectual contributions of the three came to be called “search theory” – an explanation of how the buyers and sellers of labor power can fail to match up. In other words, they sought to account for why workers were not automatically and always herded into jobs despite the assumption that work was necessary to survive. They postulated that “frictions” – inhibiting factors – allowed for jobs to be unfilled while workers were idle. Their “frictions” were hardly novel or earthshaking: “tough” labor regulation restricting firings, “generous” unemployment benefits, inadequate or inappropriate skill sets, and geographical distance between jobs and workers, for example.

It should not escape notice that none of these “frictions” touch on the fundamental friction between workers and employers, namely, the fight for the distribution of the economic surplus. None of these “frictions” address the kind of employer-friendly unemployment that pressures workers into pay cuts and concessions or increases the rate of exploitation. To state the obvious, isn’t it possible that workers do not take available jobs because the available jobs simply do not pay enough? Is this not a street-corner answer to “search theory”?

But these are answers to different questions, questions of little interest to academics accustomed to seeing employees as numbers in calculations or variables in complex equations. Moreover, workers or their organizations do not fund academic research or make generous awards to economists.

Does the Nobel-award-winning research help us understand or overcome the current crisis of unemployment as The Wall Street Journal proclaims?

No, not at all. It is irrelevant and, should it influence policy, potentially disastrous. The current tragic unemployment rate is the result of two years of uneven class war over the carcass of a severely wounded economy. Unemployment is the casualty count of the working class. Profits are the war booty of the employers. Government and its policy makers have sided decisively with the profit-seekers.

Unlike the period in Europe studied by the three economists, there are far too few jobs available today. (The Wall Street Journal in its article hailing the awarding of the prize provides a deceptive chart that shows a growth in available jobs since the worst moment of 2009, a growth that does not even account for those newly entering the job market.) The unfavorably geographical distribution of jobs today is not a matter of leaving home for another city or state, but leaving for an entirely different time zone! Witness the thousands who travel overnight to attend job fairs or apply for a few dozen jobs. The mounting foreclosures, the explosion of food stamp applications, and the growth of unclaimed medical prescriptions hardly point to “generous” unemployment benefits offering a cushy life. And of course there are no “tough” job regulations that restrained the cruel, massive layoffs of the last two years.

At its core, “search theory” finds no fault with the reigning economic system. It identifies no “friction” between the needs of people and the relentless drive for profit. It is blind to a decade of slow or non-existent job growth coupled with growing concentration of wealth and the quickening rise of after-tax profits as a portion of national income. “Search theory” dares not search in this territory.

Instead, this “groundbreaking” theory seeks to motivate the unemployed to try harder, move to low wage areas or retrain for subsistence jobs. It justifies the limiting of unemployment benefits. For all its theoretical sophistication, “search theory” is simply the latest version of the carrot and the stick – in today’s world, a shriveled carrot and a heavy stick.

Wednesday, October 6, 2010

Frustration with the Obama administration has reached a new level with only 45% of US citizens polled approving of the job that the administration is doing and 39% voicing approval of the administration’s policies on the economy (see Wall Street Journal/NBC telephone polls, 9-7-10). The overall mood is pessimistic: 65% of those polled believe that the US is in a period of decline; 59% of the polled population thinks that the country will be the same or worse in five years.

Only 30% of poll participants believe that the country is headed in the right direction. This is a negative assessment not seen since the tail end of the Bush administration.

In a normal election cycle – the give-and-take of the two Parties – this would signal enthusiasm for the party out of power: the Republican Party. However, among Republicans, only 30% have a positive view of their own party, the lowest number recorded since before 1990.

These numbers express a smoldering anger about where we have arrived since the 2008 election and where we are heading.

The only major new force on the political scene reflecting this angry mood is the Tea-Party phenomenon–-- a faux populist movement backed by extreme-right money and fueled by the ultra-right media.

Facing an interim election in November, all of the healthy forces in US political life are scrambling to establish a posture towards these elections. Bitterness, backbiting, and confusion abound. The Internet is abuzz with the anger of scorned liberals who feel betrayed by two years of, at best ineffectual, at worst, malign administration leadership. As the Administration positions itself for the coming months, it reflects this mood by jettisoning three of its leading economic lights: Peter Orszag, Christina Romer and Lawrence Summers. The exit of Rahm Emmanuel, Obama’s chief of staff, has passed the rumor level and is now a fact, as is likely the departure of many other prominent members of the administration. Despite their fealty to the corporate financial sector, Obama has suggested that he is seeking economic advisors that are more comfortable communicating with the corporate world.

Some in liberal circles cling to lingering hopes that the “real” Obama will soon be revealed. With all the enthusiasm of a revival meeting, they are awaiting a political rapture – a fulfillment of the “change” and “hope” themes of the election campaign. But my angry local letter carrier sees it differently. She says that people mistook “hope” for “dope,” a succinct declaration of her own frustrations.

Indeed, all signs point to a reshuffling of the administration in an even more conciliatory-to-the-right, pro-business direction. As the Wall Street Journal reports, “Part of the president’s task will be to ‘reset’ relations with the business community, not only to ease working in a divided Washington but also to smooth his path to re-election” (9-23-10). There is little room in this scenario for the revelation of a progressive, pro-working-class agenda. The WSJ cites senior White House officials as saying, “the president could concentrate on finding common ground on deficit reduction, education and immigration while guarding his achievements, from health care to student lending to financial regulation.”

The Political Crisis

All polls agree that approval ratings for the President have sunk substantially since his inauguration. And approval ratings for Congress hover at an embarrassing low level, a level that has been maintained since a time deep into the Bush Administration. Polls also show that both Parties are generally unpopular. Whether one bought the Obama message or not, it should have been apparent that his administration was meant to change the national mood of dissatisfaction and the international scorn brought on by the previous administration. They have failed in that task. And the political crisis continues.

The distance between the legislative actions of elected officials and the needs and desires of the electorate has never been greater. And the Obama Administration suffers inordinately from this distance because they promised so much in the presidential campaign. This distance was shown most recently with the issue of allowing the Bush tax cuts for the wealthy to expire. Initially, Obama and the Democratic leadership proposed maintaining the cuts for all but the very wealthy, a move that would have brought a measure of fairness to tax policy and generated $700 billion over 10 years in extra Federal revenue. The Republicans mounted a hysterical and demagogic campaign based on the inflammatory charge of tax increases. When opinion polls showed that the tax increases for the rich were popular (mid-September, CBS/New York Times - 53-38%), especially in key “battleground” states, the Republicans backed down. But, immediately, 31 Democratic Representatives voiced their public opposition to taxing the rich. Consequently any decision on the Bush tax cuts will be deferred until after the November elections. Every signal points to Congress maintaining the Bush tax policies for another two years.

Why is there such distance between popular issues and legislative action?

Many pundits employ vague, cloudy concepts like “gridlock” or blame a new-found intransigence or incivility. But the truth is simpler, but deeper: Elected officials are, for the most part, owned by monopoly capital. To a very great extent, the course of political success is greased with money and the opportunity to forge a successful and long political career is dependent upon corporate friendliness. Of course this is not new, but it has reached a new level of prevalence, demonstrating strikingly that the state – its structures and personnel – is dominated by and serves the interests of monopoly capital; that is, our reigning socio-economic system is state-monopoly capital.

Thus, there is no exit, without some radical surgery, from the political crisis that grips the US.

Moreover, the results of the November elections – regardless of the outcome - will have no dramatic impact on our profound political crisis. This does not mean, however, that there is nothing to be gained in the election. There are independent candidates – Greens, for example – who could open cracks in the corrupted two-party system. There are also some independent-minded Democrats who could, though only with a strong prod from progressive constituents, mount a meaningful challenge to the ossified, corporate-coddling Party leadership. And there would be advantages, advantages with a shrinking relevance, to maintaining a balance of forces favoring the Democrats. However, the ever-growing distance between the Democrats and the needs of the populace dampens any enthusiasm for fighting for this advantage.

Therefore, there is a deep and deadly contradiction embedded in the two-party system, a contradiction that will only be overcome with the emergence of independent movements unwaveringly committed to principled, progressive politics.

Going forward, we can expect the Obama Administration to focus on the 2012 Presidential election. The Obama team will maneuver rightward, leaving many of the now-distant campaign promises like EFCA or immigration reform in its wake. The hints referenced above signal an aloof presidency, above the fray, though ever sensitive to the needs of the corporations and their generous campaign contributions. Like Bill Clinton, Obama will seek a presidential posture dissociated from any ideological position, but portraying civility, bi-partisanship, likeability and managerial competence – a posture appealing to the non-ideological center thought to be crucial for re-election.Needed: A Break from the Past

Undoubtedly, these observations may not come as news for many, especially many of the 65% of those polled who think the US is in decline. The widespread mood is anger and disappointment. But little will come from moods if no useful conclusions are drawn, if patterns remain unseen, if events are misunderstood. Far too many see the political crisis in terms of flawed personalities, individual values or ideological caricatures. The long-term trend of wealth and income inequality; the ever-growing concentration of power and influence in the hands or corporations, especially the financial sector; the growth of political corruption and the role of money and media in electoral politics; the ascension of the callous, anti-social culture of individualism assailing “entitlements” or common benefits; the repeated aggressive military missions to deny any barriers to international capital--- all these phenomena interact and decisively cause the deepening political crisis. These are not moments of bad judgment, occasionally flawed policies, or aberrations. They are features of the logic of capitalism, a capitalism that brought on an equally profound and closely related economic crisis.

Not everyone yet makes these connections, but they ignore them at great peril. While there is a widespread sense that we are at a decisive moment, there is an unfounded faith that the old solutions will suffice. Some pine for an imaginary time of social harmony and cultural unity while conveniently ignoring those left out of their idyllic fantasy – a world without immigrants, embracing segregation and racism, and willfully ignorant of the crude exploitation of labor. Others embrace liberal values associated with an imaginary kinder, gentler capitalism, but turn away from the reality that the profit-hungry modern corporation stands firmly and powerfully against this dream.

Politics will become real only when we face the truth that the modern monopoly capitalist corporation stands as the adversary to all but the very rich. That understanding will lead to the further understanding that only a broad anti-monopoly strategy will solve the crises of our economy and our politics.

It’s a curious, but telling, fact that political discourse has shifted from the extreme-right-imposed cultural battlefield of abortion, gays, and guns dominating the last decade to the issues of the economy and the role of the state. The Right has entered this new battlefield under the banner of fiscal austerity and hostility to government. Led by tea-bagger foot soldiers, they rail against government spending, regulation, and social programs. If they succeed in selling this line to voters, they will bring pain and devastation not only to working people, but also to the whole economy and social fabric.

Sadly, the Democratic Party leadership has shown little or no interest in engaging the right on this battlefield. They concede that government spending should be restrained, regulation should be minimal and non-antagonistic to business interests, and social programs must be trimmed. It is left for Democratic-friendly labor leaders and party loyalists to defend this blatant coincidence of political outlook. They must excuse this conjunction of Democratic views with Republican ideology as a tactical retreat or they must argue that Democrats will inflict the pain of austerity more compassionately. Neither excuse is credible with angry, frustrated voters who continue to thirst for effective change.

This is the great tragedy of the November elections. Indeed, there is much at stake, but the Democrats refuse to fight a credible battle, a battle that would require at least a modest rebuff to their corporate masters. As things stand, the election will turn on how much fear of a return to Republican leadership can be generated rather than what the Democrats would accomplish with a victory.

Last week’s giant rally in Washington, DC only underlines these contradictions. Committed people came in droves to express both an outrage at where we are heading and a determination to join others in changing course. Hopes were high that leaders would energize the causes that inspire people to action, such as fair labor legislation, employment opportunities, peace, immigration reform, racial equality, help for the poor and disadvantaged, and mortgage and other debt relief. While speakers readily chronicled the evils produced by a system of inequality and injustice, they were hesitant to speak its name: capitalism. Instead, most urged those who came on buses, trains, planes, and cars to work for the election of Democrats in November.

This constant cycle of placing all the hopes for a better future in the hands of corporate-owned Democrats must be broken. This is not a call for those fearful of a Republican victory in November to sit on the sidelines or boycott the elections, but, rather, for them to further commit to establishing independent voices, voices that will demand that all elected officials choose between corporate fealty and the causes of the people.

For too long, many progressive and left leaders have posed supporting the Democratic Party against any initiative that might upset or provoke Democratic leaders. They narrowly and rigidly limit political action to the electoral campaign and reject any challenge to Democratic Party leadership as heretical and divisive. Such an approach has led us into the current political crisis and offers no way out. This false tactical finesse smothered the anti-war movement and tolerated the evisceration of health care reform, the expansion of imperialist aggression, the coddling of the financial sector, and the criminal neglect of the unemployed, the underemployed and the poor. It is time to reject it and move on.

There is no easy escape from our political crisis. But it begins by building movements outside of and often apart from the ineffective Democratic Party.

Saturday, September 25, 2010

Friday, September 24 at 8:00AM, the FBI made a coordinated raid on seven homes of several anti-war and solidarity activists and two offices in Chicago and Minneapolis and served grand jury subpoenas in Illinois, Michigan, and Minnesota. Other activists in California and North Carolina were contacted in an effort to intimidate. These actions by Federal agents are part of an effort to suppress militant anti-war activity and especially anti-imperialist solidarity with movements in Latin America and Palestine.

Those subpoenaed report that the FBI investigation is directed towards possible “terrorism” charges against those activists who were themselves terrorized by the Federal agency. Once again the fear-mongering “terror” charge has been mounted against all who dare to speak out against US imperial transgressions.

Initial reports indicate that the homes were ransacked with all but household essentials taken by the FBI.

Several of the activists are well known as long time, dedicated, and principled fighters for working class empowerment and social justice.

Clearly, this represents a ramping up of Federal activism against the left and, thus, a tribute to the work of these activists as well as a badge of honor in the struggle for social justice. We should all show our solidarity. You can send your support to: info@colombiasolidarity.org or info@fightbacknews.org.

The following actions are urgently needed:

Call the U.S. Attorney General Eric Holder at 202-353-1555 or write an email to: AskDOJ@usdoj.gov.

Demand:

**Stop the repression against anti-war and international solidarity activists.

The commentary excerpted below is fascinating. Russell Mokhiber draws the lesson that we must fight for single payer on our own, "dumping the Democrats." I agree.

But the writer builds his case using analysis by Don Bechler. Unfortunately, Bechler's analysis verges on childish. See my remarks after the excerpt:

Single Payer Later

By Russell MokhiberSingle Payer Action, September 7, 2010

What’s happening in California is the best argument to dump the Democrats.

Forever.

And start anew.

It’s the only option.

The state legislature in California has twice passed the California single payer bill.

And twice, Governor Arnold Schwarzenegger has vetoed it.

Earlier this year, the Senate passed it for a third time.

And the Assembly was about to pass it for a third time.

But the Democratic Speaker of the Assembly pulled the bill at the last minute....“The Democrats should have put it up for a vote in the Assembly,” said Don Bechler of Single Payer Now. “California has been the wind in the sails of the single payer movement. Each time the legislature passes it, we get stronger. We have more people in our movement than ever before. Passing it for a third time would have built the momentum.”

“The California legislature has twice before said that they are for having a universal health care system minus the insurance companies,” Bechler says. “We can be proud of winning that little battle.”...

Full item at http://www.singlepayeraction.org/blog/?p=2562

Bechler claims, "The California legislature has twice before said that they are for having a universal health care system minus the insurance companies." They said it, but it was an open secret that a good number of California legislators from progressive districts voted for the single payer bill knowing the governor would veto it. The vote was a credential on a legislator's lapel, nothing more.

Bechler further claims, "Each time the legislature passes it, we get stronger. We have more people in our movement than ever before."

Don's mailing list has grown. That's great. But Bechler does not give evidence that the legislature's staged votes were the cause. If I drink too much beer in the evening, I need to urinate around five in the morning. Sure enough, an hour later the sun rises. Gee, my urine makes the sun rise.

Every day more people experience the fact health care sold as a commodity is health care denied, health care sold at an extortionate price, health care done wrong. That experience - and as much agitation as we can do about it - is why more people than ever before believe health care must be provided as needed, as a program we all have equal rights to, guaranteed no matter what. Most of these people do not know about the Potemkin votes of the legislature in past years.

Reading the sum of Bechler's comments as reported by Mokhiber, it almost sounds as though Bechler wants to throw out a lifeline to the California Democratic Party: You guys better do some damage control, or rank and file supporters of single payer are going to take Mokhiber's advice: Dump the Democrats.

The California Democratic Party's stab in the back of single payer has made many people reconsider the entire politics of winning such a big reform. It is important to draw lessons based on facts.

Can we ever get Equal Care for All? I discussed that problem on MRZine athttp://mrzine.monthlyreview.org/2010/andrews260110.html

Sincerely,

Charles Andrews

P.S.: And there is larger analysis of major reforms in my book No Rich, No Poor. Seehttp://www.amazon.com/NO-RICH-POOR-CHARLES-ANDREWS/dp/096799053X

Monday, August 30, 2010

The August 30/September 6, 2010 issue of The Nation magazine features a forum entitled “Debating Obama,” keynoted by Eric Alterman, with responses by six other writers. The forum reflects a sense among The Nation editors - and no doubt most of the readers of the leading liberal/progressive publication - that matters did not go quite as expected after the inauguration of the youthful, well-spoken Democratic President, Barack Obama. In fact, Alterman puts it plainly: “Few progressives would take issue with the argument that, significant accomplishments notwithstanding, the Obama presidency has been a big disappointment.” Alterman goes on to say: “… if one examines the gamut of legislation passed and executive orders issued that relate to the promises made by candidate Obama, one can only wince at the slightly hyperbolic joke made by late-night comedian Jimmy Fallon, who quipped that the president’s goal appeared to be to ‘finally deliver on the campaign promises made by John McCain.’”

There is more than a little expression of betrayal in this statement.

But could it be that the disappointment and sense of betrayal is misplaced? Could it be that liberals and progressives misread the moment, misjudged the locus of power, and, indeed, totally misunderstood the mechanism of capitalist rule in the US? Could it be that the Obama election was little more than an adjustment to corporate rule, an adjustment from a failed regime that threatened to rip the fabric of contrived consensus to one more likely to strike a path offering the appearance of change and a new direction while preserving the interests of those holding power? Could it be that, in the clatter of the usual campaign rhetoric, most change-starved voters heard a message that they wanted to hear, ignoring the huge corporate funding and same cast of characters orchestrating the campaign?

This is not an understanding yet agreeable to the liberal and progressive establishment, though it was the conclusion that I, and too few others, drew during the presidential campaign. In response to a euphoric celebration of the Obama victory, I wrote the following shortly after the election:

At the top [of the Obama team] is a superstructure of solidly established, old-guard politicos who have yet to propose one idea that departs too far from the limited toolbox of neo-classical economics and imperial foreign policy. Yes, there is talk of green initiatives, a friendlier relationship with labor, support for social liberalism, and a vague, dangerously tame reform of health care. But this group has shown no new thinking on the catastrophic economic crisis. Moreover, their timidly progressive pronouncements differ little from the false hope promised by the Clinton and Carter Democratic Administrations that precede this one. .. Below this elite center of power is an electorate overcoming racism, demonstrating a decisive rejection of the Bush administration, and starved for real change.... Change will come from the efforts of those organized oppositionally to force new initiatives and not from those relying on the good will of ruling elites. To ignore this historical truth is to risk the disillusionment and alienation of all of those who have advocated change with their vote. (November 22, 2008)

And now, disillusionment is widely apparent.

A little over four months after the inauguration, I wrote again on this topic, comparing the euphoria and subsequent sourness of the venerable I. F. Stone on the Kennedy presidency. Stone, like today’s liberals, embraced JFK with star-struck infatuation. His return to reality was both bitter and filled with disappointment. My comments:

Typical of jilted lovers, many will turn against Obama with a bitter sense of betrayal. This is both naive and misplaced. Like Kennedy, Obama is neither an agent for change nor a closet reactionary. Like Kennedy, Obama is the executive of a vast structure welded to interests that have little in common with the interests of the majority of US citizens. Admirers of Kennedy will recall the enormous forces arrayed against change in his time: the Joint Chiefs of Staff, defense contractors, the CIA, Southern politicians, etc. Detractors will, with equal passion, note how little Kennedy did to challenge these forces. Likewise, those still taken with Obama fever will point with disgust at the obstructionist Republicans, the "Blue Dog" Democrats, the "disruptive" left, and other evil forces, as though they are not always a part of the two-party carnival.

It is not Obama, but this corrupted, broken two-party system of governance that betrays our aspirations. It is not designed for change, but to smother it. Never in the history of this undemocratic "democracy" have the wants and needs of the citizens been so distant from the intent of the ruling elites. This reality cannot be laid at Obama's feet.

The only antidote to the rot of this system is political independence within, but especially outside, of the existing two parties. There is simply no reason that activists engaged in Democratic Party circles cannot work outside - independently, uncompromisingly and vigorously - on progressive, advanced issues, with no concern for ruffled feathers. To fail to do so, betrays any commitment to real change. (May 30, 2009)

Indeed, the predictable disappointment has set in, witnessed by the Nation forum. It would appear from the “debate” that the fault lies not with Obama, not with liberal self-delusion, but with the system: “It doesn’t matter what Obama dreams of. The far more important fact is that the system is rigged, and it’s rigged against us,” to quote Eric Alterman.

Yes, it is – and it’s called “capitalism,” with its accompanying phony democracy, ownership of the media, and measurement of all things by profit.

Sadly, the wave of disappointment has not brought forth a deeper understanding and new resolve. The participants largely endorse Alterman’s sketch of the ills of the system: the influence of money, the Bush legacy, the dysfunction of political institutions, the power of finance, and the corruption of the media. All true, but hardly new or alien to the evolution of the system. One searches in vain for an over-arching theory that explains and connects these features of our present predicament. There is not even a modest indictment of capitalism in this debate – not to mention an advocacy of socialism.

Instead, we are offered a shallow and diverse set of remedies ranging from mandatory voting to reforming the Senate rules, including the predictable, but tragically complacent call to stay the course. To her great credit, Barbara Ehrenreich cuts through the fog of liberal hand wringing to serve up a moving indictment of government’s role as a “handmaid to corporate power.” Her palpable anger at the state of the nation leads her to announce that “these are revolutionary times.” One only wishes that her brief essay offered a course of action to match these “revolutionary times.” One hopes that we will hear more from her.

One can find little to inspire from the other discussants who serve up the following lame variations on “change that you can believe in” and resignation to Administration impotence:

●“One hopeful hypothesis… Obama is taking the best deal on the table today, but one expects that once he is re-elected in 2012… he will build on the foundations laid during his first term to bring about the fundamental “change” that is not possible in today’s environment.” (Eric Alterman)

●“From the legacy of Bush-era incompetence and corruption to the partisan discipline of the GOP and the Roberts Court to the influence of lobbyists, one marvels that the president has accomplished anything at all.” (Michael Kazin)

●“Operating in a dysfunctional environment dominated by a minority party that thinks its road back to power is to block everything and bring the president to his knees, Obama and his congressional allies have had remarkable success… far more than the bitter cauldron of partisan rancor and ideological fervor would ordinarily allow.” (Norman Ornstein)

●“…Obama may well be the most progressive alternative possible in our current reality.” (Salim Muwakkil)

●“President Obama and his unwieldy party have managed to enact major reforms… that are the most far-reaching and economically redistributive social accomplishments since the New Deal.” (Theda Skocpol)

Unlike with Ehrenreich, the sentiments expressed in these comments show no sense of outrage or urgency about the problems facing millions of citizens. Instead, there is complacency, a distance from the everyday tragedy of unemployment, foreclosure, and an uncertain future faced by even more people today than in the Great Depression.

With their apology for the new Administration, the academics in the forum display an unpardonable distortion of the history of the New Deal era. They fail to acknowledge the similar forces holding back reform in that era: intransigent corporate and political opposition, a hostile Supreme Court, and demagogues and false prophets. The Roosevelt Administration overcame these obstacles thanks to pressure from a militant, revolutionary left and the determination and commitment of unswerving progressives. Where are the Perkins’s, Wallace’s, Wagner’s, Connery’s, and Hopkins’s in the Obama Administration? To hold the Obama Administration to a lower standard is to demean the dogged effort and sacrifice readily assumed by those courageous liberals. None succumbed to the seduction of lobbyists. None weighed their future careers before the task at hand. Perhaps these scholars think the KKK and the Liberty League and the other native fascists were less of a threat then than the tea-baggers of today.

One yearns in this forum for some call to action – perhaps an endorsement of the October 2 march in Washington supported by the NAACP and the AFL-CIO – or even a commitment to revitalize the too long dormant anti-war movement. One looks for alarm at the Obama stealth commission patiently waiting for the November electoral dust to clear before pillaging Medicare and Social Security. But we find none of these progressive initiatives.

The cure for the hangover from the Obama-high is honesty and action, not remorse or more hope. The realities of our political system are transparent and have been for over a generation: the two-party system is broken and lurching ever further from any credible vision of democracy. More importantly, we are facing an unprecedented social, political and economic crisis that is in many ways even more challenging than the Great Depression. We have to be honest enough to see that we have not measured up to these challenges. We have to be bold enough to risk radical solutions worthy of the moment.